Bitcoin is the most popular cryptocurrency in the world today. It was the first cryptocurrency as well. As for its mining, it refers to the process by which transactions are confirmed, after what they join the public ledger. Such ledger is called blockchain. Everybody who can access the internet can take part in the process of mining with the help of special hardware (recommended) or software.
Defining Bitcoin Mining
The process itself stands for the complaining the latest transactions into blocks and attempting to solve a progressively complicated math problem. Solving such puzzle is a key to earning money. The one who first gets the right answer should locate the upcoming block on the blockchain. This person has a right to claim rewards as well as revenue from the transaction fees. A newly released bitcoin is the top reward.
The amount of new bitcoin released with every mined block is the prize a miner wants to get. The reward is halved approximately every four years. The diminishing reward will lead to the total release of bitcoin that equals to 21 million. The complexity of the problem is predetermined by the number of efforts put into mining. The basic rule is in case more computational power is employed, the complexity will adjust higher, making the process more difficult.
Several Words about the Nodes
A node is another important term in mining. It is a powerful machine that runs the bitcoin software and assists in keeping bitcoins active by taking part of the relay of data. Through downloading and installing special mining software, which is free of charge, it is possible to run a node. Make sure to have a particular port open. Yes, it might consume plenty of space and some amount of energy, but the result is often worth trying. Nodes spread the transactions across the network. A single one will submit the data to a few other nodes that it knows and so on.
Miners are the mining nodes. They categorize outstanding transactions into blocks and make them join the blockchain by solving the complicated math problem. It is critical to detect the number that, when mixed with the information in the block and passed via a hash feature, generates a result that falls within a specific range. The number could be anything from zero to 4,294,967,296!
You may wonder how it is possible to guess such huge numbers. It is obvious: the miners make their best random guess. It is impossible to forecast it because of the hash function. What makes the situation even more complicated is the fact several nonces may be there that generate the required result, or they may be absent at all. Once one of the miners wins, others should stop working on the given block and move to a different one.
Even though the number is difficult to guess, it stays steady over time, leading to a monitored finite monetary supply. Individual blocks should have a proof-of-work (PoW) to be valid. Other Bitcoin nodes must confirm the PoW every time a new block appears. PoW is a way to defend the users from double-spending, and it makes the ledger immutable.
The Process of New Bitcoins Creation
The main goal of mining is to let the nodes achieve a safe, tamper-resistant consensus. Another purpose is to introduce cryptocurrency into the system. The financial rewards, the fees and newly generated coins, serve the goal of disseminating new coins in a decentralized way plus inspiring the “players” to provide safety for the system.
What Are the Mining Pools?
Bitcoin mining power has spread online during the last couple of years. That is why possessing sufficient hash rate becomes more difficult. It means solving a problem and earning the rewards also becomes more complicated. Pool mining is something that saves the situation. It is a method, in which teams of separate miners invest in the creation of block, and split the reward based on the spent processing power after that.
3 Different Ways to Start Bitcoin Mining
In particular situations, you may need to buy mining hardware using bitcoins. Many fo options are available on Amazon.
- Bitcoin Mining Hardware. To start, a user cannot apply CPU or high-speed video processor card any longer. Either mining hardware or software is needed. ASIC chips can guarantee performance up to 100 times the capability of outdated systems. They dominate the market today. Such approaches save both electricity and time. Such companies as Avalon offer great systems designed for Bitcoin mining.
- Bitcoin Cloud Mining Services. Cloud mining service is another option for a freshman. Bitcoin cloud mining contracts have their pros and cons. For instance, they ease the procedure, but the risk is higher as the buyer cannot monitor the actual physical hardware. Minex, Genesis Mining, Hashflare, and Hashing 24 are just some of the cloud mining services you can try.
- Bitcoin Mining Software. Finally, you can use special mining software if you do not wish to invest into hardware or buy contracts. Download a free application to start mining. The most widely used are CGminer and BFGminer. Those are simply the command line programs. EasyMiner is for those who prefer GUI, and it is compatible with Windows, Android, and Linux. Mining software for Macs also exist.
After deciding on the method to mine, get a wallet to keep bitcoins. When installing the wallet of your choice, spend some time on activating 2-factor authentication to guarantee security. It is possible to keep wallets on the computers without a constant Internet connection. Try Kraken, Coinbase, Local Bitcoins, or SpectroCoin to start storing the bitcoins.
That is it! Now, all you have to do not to miss a thing is keep in touch with all the recent, related news. Choose the official, trusted sources of information (Bitcoin Mining News Section on various portals).